Blend’s David Alcock on why Sunak cannot afford to put housing on the backburner

A report by the Centre for Cities shows that compared with the average European country, Britain has a backlog of 4.3 million homes missing from the national housing market as they were never built. Addressing this backlog, or certainly learning from past mistakes, is the key to solving the unprecedented housing crisis that is gripping the UK. Yet despite it all, this Conservative government seems to have adopted an anti-development view that is hard to comprehend in the context of ongoing missed housebuilding targets. The view also goes against one of the most closely held values of British society that an Englishman’s home is his castle.

Compulsory building targets have been watered down, the Help to Buy scheme has gone, the requirement for councils to demonstrate a five-year supply of housing land has been scrapped and the government missed an opportunity to support housing in the Spring Budget, and in addition 50 local authorities have announced their intentions to scrap their planning targets.

The government’s appeasement of its backbenchers, and the free rein given to quangos, will have catastrophic impacts on housing supply. But it will also have dire consequences for many SME housebuilders, which will have to shut up shop. Sit down with any developer and ask them what’s the greatest challenge they face in delivering homes – the planning system will place in their top two responses, and you will also hear how its not getting any easier.

Having supported SME housebuilders for the past six years, Blend is acutely aware of the challenges faced by borrowers. Some SME housebuilders say that developing is no longer worth the headache; one of my clients who’s been waiting on planning for a small scheme since 2019 is considering shutting up shop. This is a sad outcome for a sector that has long been the backbone of the construction industry and that’s vital to the nation’s economic recovery.

But when you realise the total number of SME housebuilders has decreased by 80% over the last 30 years, it becomes very apparent why we continue to face a housing crisis and fall short of our housing targets year on year. But the reality is that the broken planning system is forcing some SME housebuilders out of the market. 

A broken planning system

There is a widespread view that the existing planning system is broken. The solution proposed in the government’s white paper involves a radical change to the status and content of local plans. The issue? Since the launch of the government’s Planning for the Future consultation to speed up and modernise planning and get the country building, no real steps have been taken to reform the planning system. Fast-forward three years since the launch of the consultation, a survey by the Home Builders Federation shows that nine out of 10 SME housebuilders are unhappy with the government’s approach to housing.

According to 93% of surveyed SME developers, securing and processing planning permission to the point where construction work can start is the most important barrier to growth. I am hearing the stories weekly and witnessing the impact first hand.

Another report lays bare the implications of the government’s anti-development approach to housebuilding, warning that supply could halve and fall to the lowest level since the Second World War. As well as the much-publicised reforms of the planning system that will see local authorities no longer required to plan for the housing needs of its communities, the report highlights the growing list of interventions by bodies such as Natural England that could see supply fall from 233,000 last year to below 120,000 homes per year in the coming years – well under half the government’s frequently espoused target of 300,000. 

In summary, the future of housing hangs by a thread and this government cannot afford to put housing on the backburner.

David Alcock is managing director at Blend